4/10/2008 @ 3:00PM

Best And Worst Cities For Jobs

The past five years have been a boon to the economies of cities across Florida as housing prices soared and new construction was rampant.

With these gains came an influx of jobs. In southwest Florida, which includes highfliers like Naples and Cape Coral, 25% of jobs were housing-related at the peak in 2006, compared with 10% nationally, according to the economic research firm Moody’s Economy.com.

With the housing market scorching, the Cape Coral metro area had the fastest job growth in the country the past five years, at 5.4% annually. Naples is close behind at 4.5% annually, fifth fastest in the country. A look at the 10 metros with the fastest job growth includes a who’s who of housing boom towns. Port St. Lucie and Ocala in Florida make the list. So do Las Vegas, Phoenix and Riverside, Calif.

“These were housing-juiced economies and were ground zero for the housing boom,” says Mark Zandi, chief economist for Economy.com.

As the housing market skidded, the fallout has been severe in these areas. Job growth slowed dramatically in all of these metros in 2007. Housing prices fell 11% in Port St. Lucie in 2007, and they got a 7% haircut in Vegas and Cape Coral.

Foreclosures are also a problem. They reached 4.2% of the homes in Las Vegas in 2007 and 3.8% in Riverside. These were the third- and fourth-highest foreclosure rates in the country among the 100 largest metro areas.

What’s next for these cities? We are not going to see a return to 5% annual job growth anytime soon, as the housing mess isn’t likely to sort itself out for at least another two years. And with the U.S. potentially in a recession or on its way to one, these economies could struggle, because most are tourist destinations.

There is hope, though, especially for job prospects in Las Vegas, Phoenix and Riverside. “These are good fundamentally solid economies and should rebound strongly,” says Zandi. Migration to these cities has tailed off, yet they still have some of the highest migration rates in the country. Las Vegas’ economy is tied heavily to tourism and gaming, but Riverside and Phoenix have diverse economies, and the population for both metro areas now tops 4 million people.

The recovery in Florida could be a little slower. Zandi points to two underlying problems for most locales: very high and volatile homeowners insurance rates and a complicated property tax system for nonresidents with vacation homes.

One area that is likely to maintain its torrid job growth is Provo, Utah, which had the eighth-fastest job growth the past five years, at 4.2% annually. Provo ranks 11th overall in our ranking of the Best Places for Business and Careers. Employment actually accelerated in 2007 and was up 5.5%. Crime rates in Provo are among the lowest in the country, and 31% of the adult population has a college degree, compared with 25% nationally.

Business costs in Provo are 6% lower than the national average. Good news for employers like
Intel
and
Micron
, which created a flash-memory joint venture in the area that started production last year. The venture is expected to eventually create 1,850 jobs with a total investment of $3 billion.

Our 10 metro areas with the best job growth increased employment by a cumulative 1 million jobs over the past five years. The story at the other end of the spectrum is not so bright. The 10 metros with the worst job growth lost a total of 286,000 jobs during the past five years.

The main artery for job loss in the U.S. runs through Ohio and Michigan, which had eight of the 10 metros with the biggest job losses. Hillary Clinton and Barack Obama both campaigned vigorously in Ohio in February, blasting the North American Free Trade Agreement. No doubt that was an appeal to voters in places like Canton, Dayton and Youngstown, where NAFTA is associated with sinking employment.

“NAFTA is used as a whipping boy for all the problems that these areas are struggling with,” says Zandi. Yet the culprit for most of the lost jobs in the area is the deterioration of the domestic auto industry. The struggles of Chrysler,
Ford Motor
and
General Motors
have caused thousands of jobs to flee locales with heavy auto employment, like Detroit and Flint.

Any turnaround in these cities is likely to take years, and there is no silver bullet that will do it. But Zandi has three tenets that these cities should follow. First, educate the population. In Canton, Detroit, Flint and Youngstown, less than 18% of the adult population has a college degree. Next up, work on improving the infrastructure.

Finally it is important to keep costs down to try and entice new businesses. Michigan in particular has work to do on this front. Business costs in Ann Arbor, Detroit and Warren are all above the national average.